U.S.-based crypto trading and exchange platform Coinbase, which was valued at $1.6 billion in August 2017, has seen its value quadruple amid the yearlong market downturn.
A new report revealed that Coinbase is securing a new $500 million dollar investment, which would value the company at approximately $8 billion.
Coinbase now worth $8 Billion
Coinbase is reportedly on the verge of closing a business deal that would see the value of the six-year-old company rise to about $8 billion.
In an exclusive report, a Recode article revealed that Coinbase would be finalizing a funding deal worth $500 million with hedge fund giant Tiger Global.
According to the unnamed sources that spoke to Recode, the leading exchange will pocket $250 million with a further $250 million being used to buy out some of the platform’s existing investors.
Coinbase’s valuation at $8 billion is indicative of how fast the crypto exchange market has grown. Investor and former manager of the Fortress hedge fund, Michael Novogratz lauded the project, calling it “the poster child” of cryptocurrency.
Speaking in Manhattan at the Economist’s Finance Disrupted conference, Novogratz said:
“Here’s the poster child of the crypto space worth $8 billion — that’s a real company, and Tiger’s not a flake of an investor. These are smart, savvy guys.”
Coinbase’ deal with Tiger Global and its $8 billion valuation comes at a time when the wallet provider appears to have hit a new market penetration milestone.
According to investor Alistair Milne, the company has added close to 5 million new users to take its current user base total to 25 million.
Since August 2017, Coinbase has recorded a 10-fold increase in trading volume, with the platform seeing over $150 billion worth of crypto transactions last year.
Coinbase stated earlier this year that it would increase staff and improve network backend performance in preparation for the increased demand. It also began exploring the possibility of adding new digital coins to its trading site and acquiring companies with experience in the trading industry.
All these efforts appear to have paid off, with an average of approximately 25,000 new users joining the platform every day. This figure is identical to what was witnessed in the second half of 2017 before the market went on a rally that saw Bitcoin hit an all-time high of $20k.
VC’s “pouring money” into crypto
The one narrative that has dominated cryptocurrency market in 2018 has been the massive decline assets have suffered.
Since the turn of the year, the market has mostly been in free fall, with Bitcoin’s decline highlighted by its drop from $20k to under $6k on several occasions. Altcoins have mirrored the top coin, a trend that saw the second largest crypto, Ethereum, freefall from a high of $1,200 to settle at just above $200.
The crypto market has also struggled with a decline in trading volume, finding it difficult to sustain any would-be upsurge momentum.
In spite of that, the last few months have seen a flurry of activity in the crypto space involving venture capital firms.
A recent study by Diar shows that venture capital firms and global multinationals have vast sums of money into the crypto industry via big bets on trading exchanges.
The report indicates that VCs have helped raise over $3.9 billion to fund projects in blockchain and the digital currency space, with a significant amount coming into exchanges.
Just last week, Switzerland’s Seba Crypto AG raised $103 million and targets creating the first regulated cryptocurrency exchange in the country.
The firm, which boasts top ex-UBS executives among its leadership, has received the backing of the Financial Market Supervisory Authority (FINMA), the country’s financial watchdog.
Other exchanges are also expanding
Though Coinbase appears to have outshone some of the crypto exchanges, it is worth noting that many of these critical platforms have also grown dramatically over the year.
Several cryptocurrency exchanges have successfully raised significant funds to improve their services and products. Binance, Bittrex, Bakkt, and Huobi are some of the top exchanges that have elaborate expansion plans as the market anticipates an upside in the remaining period of 2018.
These efforts receive support from a myriad of VCs and investment companies, and the improved infrastructure will no doubt put crypto in an excellent place for further adoption.